SP Tulsian`s view on GVK Power

SP Tulsian, sptulsian.com shares his view on GVK Power. He also says that the financial wisdom does not exist with the company.

Tulsian told CNBC-TV18, “GVK Power, what is the reality and what is the expectation or the efforts made by the company? If you see the interest burden for the company Rs 165 crore in Q4 which has risen by about Rs 35-40 crore sequentially and more than about maybe Rs 80-90 crore YoY. This we have been hearing, but yesterday also we have discussed that on the other hand they are also looking to increase their stake in Bangalore Airport, Mumbai Airport. They are looking to acquire the huge assets, maybe running into the value of about USD 3-5 billion in the form of coal mines and all that.”
He further added, “Sometimes I wonder whether the GVK has that kind of depth really in their balance sheet. Even if they have the partner infusion in their SPVs or maybe the private equity, whatever form you may call it in their SPVs or in their sub-assets which are held by the company, I don’t think that that can really give them such a big relief. Sometimes I wonder whether the financial planning wisdom really prevails in these companies, because they are only looking to increase their scale without considering the leveraging which is happening in the case of the company. So I am highly disappointed with the Q4 numbers. Except for interest, you have a flat earning, a flat margin and your interest is increasing so rapidly, I don’t think that one can really be comfortable. But yes, maybe beyond a point, maybe at Rs 10-11 one can make an effort to buy the stock, wait for three, four, five months, stock doesn’t remain at those levels again you will see a price of Rs 13-14-15. But the financial wisdom definitely does not exist with the company.”